PepsiCo offers to settle with Indian farmers it sued over potatoes for Lays chips

Updated 8:39 PM ET, Fri April 26, 2019

New York (CNN Business) - PepsiCo has offered to stop pursuing four small farmers in India it accuses of illegally growing a variety of potatoes registered for exclusive use in its Lays chips.

The company's Indian subsidiary filed lawsuits against the farmers earlier this month. They were heard by a court in the Indian state of Gujarat on Friday, when a lawyer for PepsiCo offered to drop the case provided the farmers join thousands of others in the company's authorized cultivation program.

"That was a discussion that happened in the court today," a PepsiCo spokesperson told CNN. "We told them, why don't you join our program and we will provide seeds ... Either join us or grow other potatoes. That way, we are willing to let go of the case."

A lawyer for the farmers has asked for time to consider the offer. The next court hearing is due June 12.

Farmer unions and activists have been fighting back against the food and beverage maker over the case, the latest battle in India between local businesses and big global players. Small retailers have been protesting against companies like Walmart and Amazon — claiming the American giants are unfairly destroying their business — and even succeeded in getting the government to put in some restrictions.

PepsiCo, which owns brands like Pepsi, Lays, Gatorade and Quaker Oats, is reportedly seeking damages of 10 million rupees ($143,000) from each farmer. The farms they operate have only a few acres each.

"The company was compelled to take the judicial recourse as a last resort to safeguard the larger interest of thousands of farmers that are engaged with its collaborative potato farming program," PepsiCo's spokesperson said.

The company will not be seeking any compensation if the farmers agree to the settlement offer, the spokesperson added.

Farmers' associations and activists in India called on the Indian government to step in and take action against PepsiCo. In a letter to the government published earlier this week and shared with CNN Business, they said the farmers' rights to grow and sell registered crops are protected under India's agricultural laws.

"We believe that the intimidation and legal harassment of farmers is happening because farmers are not fully aware of [their] rights," the letter said. The letter also claims PepsiCo sent private detectives to the accused farmers posing as potential buyers, secretly recording video of them and taking samples of the potatoes.

PepsiCo did not comment on those allegations.

The company's actions are "against food sovereignty" and the "sovereignty of the nation," said Kapil Shah of Jatan, one of the advocacy groups helping to defend the farmers.

"This is the first bow down from Pepsi," Shah said in reference to the offer to settle.